Economics & Investing For Preppers

Here are the latest news items and commentary on current economics news, market trends, stocks, investing opportunities, and the precious metals markets. We also cover hedges, derivatives, and obscura. Most of these items are from the “tangibles heavy” contrarian perspective of SurvivalBlog’s Founder and Senior Editor, JWR. Today, we look at the recent Rock Island gun auction. (See the Tangibles Investing section.)

Precious Metals:

Gold, silver prices see safe-haven demand on global economic worries.

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Gold nears 7-year peak on virus economic impact; palladium hits record. A little snippet:

“Elsewhere, palladium scaled a record high of $2,841.54 an ounce and was last up 5.2% at $2,771.77.”

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Why silver prices may climb to their highest yearly average since 2014

Economy & Finance:

At Zero Hedge: The Global Supply & Demand Shock Of The Coronavirus. (Thanks to H.L. for the link.)

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CNBC: There’s now a record number of 401(k) and IRA millionaires, according to Fidelity

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Something over at Wolf Street to file under “I told you so…”:  Coronavirus Slams Airbnb, Airlines, Hotels, Casinos, San Francisco, Other Hot Spots

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Dominos Are Falling – China Shutdown To Crush India’s Already-Crumbling Economy

Commodities:

Doctor Copper Strikes – A True Economic Barometer

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OilPrice News reports:  U.S. To Become Net Oil Exporter This Year: EIA

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Another piece by Irina Slav: European Gas Prices Set To Slump

Federal Debt:

At Wolf Street: Who Bought the $1.3 Trillion in Debt the US Government Added to its $23-Trillion Pile in 12 Months?

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CBO: Debt-to-GDP Will Double in Three Decades

Forex & Cryptos:

Euro vs USD Price Forecast: EUR/USD Eyes New Lows – Will the Selloff End?

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GBPUSD trading back below its 100 day moving average

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Bitcoin Tempts Shattering All-Time High After Historic Golden Cross

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Irish Court Seizes $56 Million in Bitcoin From Alleged Drug Dealer

Tangibles Investing:

The Rock Island auction company recently held a four-day auction. It was their biggest ever, with more than 11,200 guns, in 5,500 lots. On three of the four days, they started out at 9 AM and didn’t finish until around 7 PM. The auction raked in $10.million. Here are a few observations, from the portions that I watched via their online video feed:  The market for commemorative guns is still very soft. The market for double barrel shotguns seems to be softening, but there was still strong bidding for small bore (.410 and 28 gauge) shotguns. Webley revolvers and autopistols seem to have renewed interest. Some of of the swords and pole arms went for absurdly low prices. The general consensus was: There was simply too many lots for the pool of bidders to absorb, all at once.  So some “low ball” bids were successful. I observed many guns in “so-so” condition, or quite common guns, were selling for as low as one half of the low end of the catalog estimate ranges.

But there was some surprisingly strong bidding. Notably: The prices of pre-WWII S&Ws seem to now be catching up with Colts–although First Generation Colt SAAs still attract more attention. And I noticed generally that the spread in prices between pre-1899 and otherwise identical post-1898 guns seems to be widening. There was certainly strong bidding on many pre-1899 cartridge guns. Folks are definitely waking up to importance of pre-1899 guns, especially since so many states are passing “Universal Background Check” laws. (And those laws usually exempt pre-1899 guns.)

Provisos:

SurvivalBlog and its Editors are not paid investment counselors or advisers. Please see our Provisos page for our detailed disclaimers.

News Tips:

Please send your economics and investing news tips to JWR. (Either via e-mail of via our Contact form.) These are often especially relevant, because they come from folks who closely watch specific markets. If you spot any news that would be of interest to SurvivalBlog readers, then please send it in. News from local news outlets that is missed by the news wire services is especially appreciated. And it need not be only about commodities and precious metals. Thanks!




28 Comments

  1. Reference Record Number of 401K and IRA Millionaires: Can you imagine the problems these folks will face when the monetary reset hits and the economy dumps?

    The reality is that no nation can survive with a debt burden such as ours and a fiat currency
    that has nothing to back it up.

    History is about to repeat itself and it’s our turn in the barrel.

    1. The simplest and least troublesome solution to our national debt is for the government to (virtual) print the money to pay it off over a long weekend and on Monday the national debt is zero. It should also include a commitment to a balanced budget from then on.

      1. One Guy: If I understand this correctly,every time the Federal Reserve prints more money it
        further devalues the currency in general. It seems to me that it’s unlikely that the
        debt can ever be paid down.

        There only three options with debt. Pay it off. Refinance.Bankrupcy.

        1. The only way to pay it off is by fiat currency that is NOT issued by the Federal Reserve. Only problem is, said bank only recognizes their own fiats, and is as implacable as Pharaoh.

          Isaiah 52:3 “For thus saith the LORD, Ye have sold yourselves for nought; and ye shall be redeemed without money.
          4 For thus saith the Lord GOD, My people went down aforetime into Egypt to sojourn there; and the Assyrian oppressed them without cause.
          5 Now therefore, what have I here, saith the LORD, that my people is taken away for nought? they that rule over them make them to howl, saith the LORD; and my name continually every day is blasphemed.”

          It’s going to take an event as serious as the Red Sea crossing to get us out of this pinch.

        2. On the topic of debt….

          And this is crazy but true.

          Our banking system is based off of fractional reserve. The rates vary but…

          In simple terms (trying hard here) (and verified by several sources including Colledge educated economists)

          Fractional reserve banking is simply put that you are able to over extend your actual holdings by a given variable (in this we will use 10 to 1 it’s not this high but it makes math easy)
          Because there is never a time (hardly ever) that all customers will with draw all the money at once.

          Now let’s say you open a new bank. You are able to secure …. (To keep the math simple and easy) 50,000 dollars .

          Let’s say the fraction is set at 10 to one (as stated earlier) your new bank can now loan out upwards of 500,000 dollars. And charge interest on these loans (we will use 25% not counting compound interest)

          Let’s say you (as the bank) loan out all of that in one loan.
          And let’s say it is all paid back at once (hello winning lotto ticket) the debt is paid at 520,000 dollars.

          Now just as issuing the loan is done on a fractional reserve scale the returning value is reduced by the same amount (times 10) so now your new bank can issue loans out at 5200,000 dollars.

          Well while the loan is outstanding your bank is worth 520,000 dollars. So guess what?

          Yup now your bank can issue loans based off of the money owed to them in outstanding loans. Which can be figured off of the same fractional reserve as the original start up capital.

          The reason for this is the same not all debts are repaid instantly. A good example is realestate loans with 20 year repayment time lines.

          Now looking at the above system it’s easy to see how money is created.

          And this is Infact how most money is created.

          The biggest loss of value to the banks is repayment of a loan … since it is ( using our example of 10 to 1) going to drop the value of our bank by 10 fold.

          Here is where it gets interesting (if your still following)

          The printer of our money is in fact the Federal reserve bank (federal in name only similar to federal hydroshock ammo)
          Which gets its net worth the same way and loans out the us dollar to the government with interest attached.

          In short (and to jump ahead and omit several steps)

          If the number one client of the Federal reserve were to pay off all debit the bank would in essence not be able to function because all of its business dealings are based off of the amount owed to it by the us government.

          And remember they print \ make the money. So it they can’t back the money they can’t print the money and we have a problem because in short order the “Federal reserve note” (us dollar” will no longer be accepted as a debt payment method.

          A similar event happened with the Confederate money after the civil war (it was Infact gold backed) the general public just refused to accept it and there was no enforceable way to get your gold for it so it became kindling and toilet paper.

          This is why you will never see a clearing of the national debt.

  2. I thought I would pass on this information about all of you that will soon be turning 65 to enroll in Medicare. Newflash!!! Just so ya know, there is a thing called (MAGI) or modified adjusted gross income that medicare has implemented when deciding how much additional correction you will have to pay for your medicare part B and prescription . It’s no more than a additional tax. MAGA may include one-time only income, such as capital gains, the sale of property, withdrawals from an IRA account or conversion from a traditional IRA to ROTH IRA. ONE-time income will affect your medicare income-related monthly adjustment amount for only one year. The table they use shows married filing jointly or single, head of household or married filing separately. They look at your income tax YEARLY to adjust your MAGI. So if you sell property, cash in your IRA or roll it over you get popped!!! Even if you don’t sell property or change your IRA they look at your income tax return and you are popped an additional “TAX” ugh!! example married / $174,000.01-$218,000 – PartB IRMAA is : additional 57.80 and PartD prescription is: $12.20. Now you say well that’s not too bad. OK, well sell some property and they look at your income tax and it shows up and now the example, married / $218,000.01- $272,000 Part B IRMAA is : $57.80 and Part D prescription IRMAA is : 31.50. Example Married/ maybe cash in IRA, or sell that lake house, or mountain home now with MAGI of $272,000.01 – $326,000 Part B IRMAA is : 231.40 Part D is $ 50.70. I’ll give you one more example, MAGI of 326,000-$749,999 Part B IRMAA $318.10 and PartD prescriptions $70.00! – That is $ 388.10 That is your income related monthly adjustment for a year for your Medicare!!!!! So they go back to 2018 tax returns to adjust your medicare TAX for 2020. You might do some adjusting of your own before it’s time to go on Medicare. The only thing good you might say from keeping your private insurance is your deductible might be as high on medicare. Grrrrr I think they started this adjusting around 2018. I have talked to older people and their medicare runs about $132.00. But all of you baby boomers out there we are getting the special rate!!! and especially if you are a hard worker and saved and planned for your retirement. Guess what, again you get the special rate!!!. Punished for doing your best. Just passing this info along. Gaddygirl

  3. CBO: Debt-to-GDP Will Double in Three Decades

    The chart in the link is Jan 2019 showing slightly less than 80% debt to GDP. If you google it for 2020, we are currently at 106%. The CRFB website has a lot of great info though.

    It was digging into the Congressional Budget Office and Social Security Office spreadsheets a few years ago that finally convinced me we’re doomed. The best place to hide stuff from the American people is in plain sight.

    The CBO is terrible at projections. You can go to their website and prove it yourself. I downloaded their 2008 websheets back in 2018 to check and see how well their 10-year projections were. They had projected the national debt to be 12.7 Trillion dollars in 2018. It was actually 20 trillion dollars. They were off by 57%. They will be way off on their 2049 projections as well. The debt to GDP will be over 200% WAY before 2049, you can bank on that one. There will be a financial SHTF before then too. I’m already on the record for saying the U.S. as currently constituted will not even be the same in 2049 and I’m sticking to it.

    The national debt in and of itself isn’t as important as the debt to GDP. The national debt is just a big meaningless number. The debt to GDP puts it into perspective. For example, to say that Joe is $100,000 in debt is meaningless. If we find out Joe is a billionaire, we yawn. If we find out Joe is on Social Security barely making his food and rent payments, then we gasp. Well, Uncle Sam is in the latter category and his days are numbered. He can’t just print the money because he has no money, he borrows it all from a private bank called the Federal Reserve, which isn’t federal any more than Federal Express is. We’re headed over the waterfall, we can see the mist rising up there ahead of us, we’re just not quite sure when we’re going over. But it’s gonna get real ugly when we do.

    1. St. Funogas

      The reality is that the cost of living will only increase. It will consume more and more of our income.

      Literally the only option is to invest in semi or complete self sufficient life styles.

      If we are growing our own food we can offset and manage this increased cost with the savings.

      If we invest is physical gold silver etc we can sell these to adjust to the increases.

      If we are really looking to be prepared we should also be semi or totally self sufficient.

      Think about it grid goes down, pandemic, financial collapse. … Every scenario requires us to be self sufficient.

      That should be our main goal

      Can’t buy property in the redoubt …. Grow a garden. Start now start small …. Just start.

      1. Amen brother! Every point you make is spot on. But even savings will melt away with hyper inflation unless they are in the form of silver and gold as you mention. People think it can’t happen here but I think it’s an eventual certainty. Debtors love inflation because debts shrink away just like savings do.

        Interestingly enough, a roll of dimes is worth $5 but as I type this, a roll of silver dimes has $66.57 worth of silver in it. Now that’s the kind of savings that inflation can’t touch. 🙂

      2. From your post: “Literally the only option is to invest in semi or complete self sufficient life styles.”

        AGREED.

        Among the aspects of this is investment in means of production, and a key aspect of this is food production. Anyone who can produce their own food (or a substantial portion of it), will have a great advantage.

    2. You can blame the feminist movement and women’s rights for that deficit.

      With 70,000,000 social security numbers never printed due to abortion, there in lies the tax base to not only support us old folks on social security but pay off the debt.

  4. I once read (many years ago) that if we marked the gold in Ft. Knox to market we’d be able to pay off the national debt. So, I just did some math.

    There are 147,000,000 million ounces of gold in Ft. Knox. Todays price for gold is $1648.00 per ounce. Let’s round it up to $2,000.00 to make it easier. So that would give us $294,000,000,000.00 toward the national debt. However, the national debt is 22 trillion and rising. This isn’t going to work.

    I then made the price of gold $10.000.00 an ounce so that when things get so bad with paper currencies gold will absolutely fly. Unfortunately, that would only give us $1,470,000,000,000.00. A shortfall for sure.

    We’re all doomed. But I did inherit some money not too long ago and bought 10 American Eagles at about $1450.00. I consider this as “back up against the wall ” for preservation of wealth only. If there is something left to rebuild it will be useful but it is not for speculation. I have some small limited gold stocks for that. Do I think the government would ever attempt to take it or make cashing it in impossible? Absolutely. So, I’m crossing my fingers just in case…for what it’s worth.

    1. The price of gold today is just south of 1500.

      The price of food is (for a family of 2) about 100 dollars a week…. Mine and my wife’s diet consist of about 50% veggie and fruit with grain cheese milk meat making up the rest. This is 100 bucks a week when I’m strapped for cash and we are scrapping by barely.

      So ok if we were living in our own place and gardening enough to offset the produce only cost…. That would be…1,300 a year saved.

      Seeds to do this cost practically nothing and if your creative it is entirely do able in a standard nonapartment home.

      That is almost throwing away an ounce of gold a year.

      Now I’d reckon most people’s groceries are a bit higher than ours based on it’s just me (who eats a lot) and her who can’t even finish a child’s size hamburger on her own.

      This is the point I’m trying to make. The cost of living only goes one way…. Up.

      So let’s say you started your garden 3 years ago…

      Back in 2016 you spent 500 dollars to grow an heirloom garden. You would have had almost 3 ounces of gold worth of savings

      Back in 2016 if you had spent double that 500 (still not an ounce but we will call it one maybe it was on sale) with and average price of 1251 per ounce. Now you would have earned a little over 200 bucks.

      Gold is for savings. You get savings by being self sufficient.

  5. Re: Starbucks
    I worked there for 16 years.
    They started the beer wine thing about 5-6 years ago. (I left about 4 years ago 1. Because I HATED the direction the company went (trying to force us to all be crazy socialists, (Their mothership is in Seattle after all) 2. I get much more satisfaction taking care of my mom and dad who have Alzheimer’s.

    Any way, it’s not that people don’t want to pay $ for cruddy coffee, OH THEY DO!! They also come in THREE times a day to do this!!! You wouldn’t believe how many do this!!

    They can keep doing that if they want. I took the generous severance package they gave me and put most of it into Beans, Bullets and bandaids!!!

    He He He, I’m sooo much happier now!!

    1. RKRGRL68:You are a smart guy!!! I’ve been trying to figure out your name but no luck yet.
      A few years back we were at a gun show.Sara Weaver was autographing and
      selling copies of “Ruby Ridge”. She asked my name and I said Chuck.
      She said “Normal Spelling”? I said yes and my friends got a good yuck!!!
      Since then it’s been NormlChuck.

        1. The comment wasn’t aimed at rkrgrl68 or chuck.

          It was a joke about the number 68 which was deemed inappropriate apparently. Sorry about that. Just saying there was no rudeness at people or persons

  6. I found this online about nations using debt and how long can it go on. Well we have a perfect example in Japan. See this;
    Purists might take exception with the argument that modern Japan is the best case study here. To economist Gave, other, more historical, examples warrant attention. “Financing government spending by printing money is as old as paper money itself,” he says. “The Song Dynasty did it. The Weimar Republic did it. And Robert Mugabe and Nicolás Maduro both did it. But perhaps the closest historical parallels to today’s MMT proposals are to be found in 18th century France – two of them in the same century!”
    Japan’s journey has its place, though. As with everything from a shrinking population to learning to live without nuclear reactors, Japan is often humankind’s laboratory. If we’re looking for a modern mainstream economy proving that a debt-to-gross-domestic-product ratio of 250% needn’t cause a crisis, it’s Japan

    By WILLIAM PESEK
    MARCH 18, 2019

    Now if Japan can pull this off at 250% without the Global Reserve Currency and not the lone Superpower than I can give the United States a few more years.

  7. My local farm and feed store recently swapped some merchandise around due to slow sales of home decor and clothing. They expanded boots, ammo, and added a knife display case. The shop keeper told me they were looking to mix things up and asked if I wanted to suggest something (non FFL)? We discussed 80% receivers, and I was very clear that if I could walk in here and purchase a chunk of partially milled aluminum with cash and no ID check, that myself and several friends would be very interested in such products. Talk to your community shop keepers (not the big box stores controlled by a corporate board of directors). They want and need your business, and you (should) want and need the product. Let them know you will give them your business.

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